Cookie Policy

We use cookies on our website and have placed these on your computer. By continuing to use our website you consent to this. For more information, including how to change your cookie settings and to disable our non-essential Google Analytics cookies, please refer to our Cookie Policy. If you do not wish to be reminded of this on each visit, please use the close button.

Newsround: Draghi gives FTSE a lift

9 March 2018


Tags: Macro Economics

FTSE News

Hints from European Central Bank chief Mario Draghi that any exit from quantitative easing would be gradual helped boost the FTSE 100 on Thursday (8 March) as it closed up 0.6% above the 7,200 mark.

Next Tuesday (13 March) US inflation figures are released. These are likely to be closely followed as concern over the impact of rising inflation on the pace of interest rate hikes was a key factor behind the recent market correction. The same day a ‘Spring Statement’ from UK Chancellor Philip Hammond is announced. It is not expected to contain substantial measures or detail which will have to wait until the full Budget later in the year, but Hammond is still likely to be under scrutiny given the current tensions over Brexit. In the early hours of Wednesday (14 March) Chinese industrial production data is out. An update on US retail sales will be delivered later in the day. The week will be rounded off by the building permits release, which offers a good insight into the state of the housing market across the Atlantic. 

Sector in Focus 

The apparently sleepy and dull paper and packaging sector sparked into life this week. On Tuesday (6 March) Smurfit Kappa (SKG) received a surprise takeover approach from US-based International Paper. This lifted its own share price as well as those of peers like Mondi (MNDI), DS Smith (SMDS) and RPC (RPC) No details were given as to the value of the approach. Smurfit’s board has rejected the bid, suggesting it doesn’t reflect the true worth of the business.

International Paper is a big player in the North American market. Owning Smurfit would also give it a significant position in Europe and Latin America. As such, Smurfit shareholders will probably want a very large bid premium before they agree to a takeover. WestRock and DS Smith are among the companies in the sector recently making large acquisitions. WestRock, the second biggest player in the US after International Paper, struck a deal to buy KapStone for $4.9 billion. DS Smith made its first move into the US market last year with the £722 million acquisition of Interstate Resources. Previous packaging takeovers on the UK stock market include former AIM-quoted Powerflute being bought by Nordic Packaging, and subsequently sold to Mondi. British Polythene Industries was acquired by RPC.

Economic Update

The Spring Statement from UK Chancellor Philip Hammond next Tuesday (13 March) will take place amid a ratcheting up of the Brexit process as both the EU and UK look to agree a transition agreement. Business leaders, desperate for clarity, will be looking for an agreement to be more or less in place in time for a meeting of the European Council on 22 March.

ETF Watch

It can be difficult for ordinary investors to gain exposure to the bond markets. One option is to use exchange-traded funds. iShares Global Corporate Bond (CRPS) tracks a basket of debt issued by some of the world’s largest companies for an ongoing charge of 0.2%.

Company Announcements

14 March – Investors are eagerly awaiting Dignity’s (DTY) full year results as it provides the first opportunity for the company to comment on the implementation of its new pricing strategy which triggered a major profit warning in January. However, it may be too early to get any solid feedback, particularly as Dignity said in January that it expected to give a proper update on progress and sales volumes at the half year results in August.

14 March - Last year was difficult for Hikma Pharmaceuticals (HIK) after it was forced to cut its sales guidance three times amid competitive challenges in its US generics business. When the drugs business reports 2017 results, investors should look for details on how bad price and volume erosion for its generic drugs is expected to be in 2018. There may also be updates on Hikma’s delayed launch of VR315, a generic version of GlaxoSmithKline’s (GSK) asthma treatment.

 

Writer: Tom Sieber Tags: Macro Economics

You can start investing today through any of our account options:

Dealing Account

Access a wide range of global investments in this flexible, unrestricted account.

Find out more

Stocks and Shares ISA

Take advantage of tax free investing with our Stocks and Shares ISA today.

Find out more

Self-Invested Personal Pension (SIPP)

From great value to best-in-class, access the SIPP to suit your needs through our extensive network of providers.

Find out more

I've still got questions!

We’re on hand to help at our Customer Experience Centre on 0345 0700 720

Selftrade does not provide investment advice. This article is the authors view and is not the view or opinion of Selftrade and Selftrade accepts no liability for any loss caused as a result of the use of this information. The opinions expressed are those of the author at the time of writing and should not be interpreted as investment advice.

The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance. We do not provide advice or make recommendations about investments. If you have any doubts about the suitability of an investment, you should seek advice from a suitably qualified professional adviser.

If you have a Stocks and Shares ISA, make sure you get the best value for your investments. We are ranked top for price on large portfolios (Platforum, 2018).

Open an account today and we’ll cover any transfer fees up to £100.*

*T&Cs apply.

Open a Stocks & Shares ISA

Find out more